<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                   FORM 10-Q


(Mark One)

(X)   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the quarterly period ended September 30, 2004.

( )   Transition report pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934 for the transition period ______ to ______.

                          Commission File No. 1-13925

                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                      ------------------------------------
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
            Delaware                                       38-3389456
            --------                                       ----------
(State or other jurisdiction of                (IRS Employer Identification No.)
Incorporation or organization)
</TABLE>

            5350 Lakeview Parkway Drive South, Indianapolis, IN 46268
            ---------------------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (317) 715-4196
                                 --------------
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X]  No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 126-2 of the Securities Exchange Act). Yes [ ] No [X]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<S>                                       <C>
     COMMON STOCK $0.01 PAR VALUE                  14,718,134 SHARES
     ----------------------------                  -----------------
       (class of common stock)            (outstanding at September 30, 2004)
</TABLE>

                         This report contains 35 pages.


                                       1
<PAGE>
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                                       PAGE
<S>                                                                                                  <C>
     ITEM 1.   CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

               Consolidated Balance Sheets as of September 30, 2004 and
               December 31, 2003                                                                       3

               Consolidated Statements of Operations for the Three and Nine Months
               Ended September 30, 2004 and 2003                                                       4

               Consolidated Statement of Stockholders' Equity for the Nine Months
               Ended September 30, 2004                                                                5

               Consolidated Statements of Cash Flows for the Nine Months Ended
               September 30, 2004 and 2003                                                             6

               Notes to Consolidated Financial Statements                                              7

     ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
               FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                          19

     ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS                            27

     ITEM 4.   CONTROLS AND PROCEDURES                                                                27


PART II - OTHER INFORMATION

     ITEM 1.   LEGAL PROCEEDINGS                                                                      28

     ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                                       28

SIGNATURES

CERTIFICATIONS

EXHIBITS
</TABLE>


                                       2
<PAGE>
                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                          CONSOLIDATED BALANCE SHEETS
                 AS OF SEPTEMBER 30, 2004 AND DECEMBER 31, 2003
                                  (UNAUDITED)
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                    September 30, 2004    December 31, 2003
                                                                                    ------------------    -----------------
<S>                                                                                 <C>                   <C>
ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                                       $            8,589    $           3,211
     Short-term investments                                                                         --                7,356
     Accounts receivable (net of allowance for doubtful  accounts of $1,732
     and $2,154 at September 30, 2004 and December 31, 2003,
     respectively)                                                                                 603                1,794
     Note receivable                                                                               150                  150
     Prepaid expenses and other current assets                                                     339                1,557
     Income tax refundable                                                                         882                  694
                                                                                    ------------------    -----------------
           Total current assets                                                                 10,563               14,762

PROPERTY AND EQUIPMENT-Net                                                                          70                4,985
OTHER ASSETS (net of accumulated amortization of $0 and $116 at September 30,
2004 and December 31, 2003, respectively)                                                           --                  298
                                                                                    ------------------    -----------------
TOTAL ASSETS                                                                        $           10,633    $          20,045
                                                                                    ==================    =================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
     Notes payable                                                                  $               --    $           1,750
     Accounts payable                                                                              155                2,000
     Accrued liabilities:
         Royalties                                                                                  --                  120
         Payroll                                                                                    --                   51
         Other                                                                                     141                  377
     Liabilities of CART, Inc. subject to compromise (Note 11)                                   2,271                5,626
                                                                                    ------------------    -----------------
              Total current liabilities                                                          2,567                9,924

COMMITMENTS AND CONTINGENCIES (NOTE 7)                                                              --                   --

STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 5,000,000 shares authorized, none issued and
outstanding at September 30, 2004 and December 31, 2003
Common stock $.01 par value, 50,000,000 shares authorized, 14,718,134 shares
issued and outstanding at September 30, 2004 and December 31, 2003                                 147                  147
Additional paid-in capital                                                                      87,765               87,765
Accumulated deficit                                                                            (79,846)             (77,841)
Accumulated other comprehensive income                                                              --                   50
                                                                                    ------------------    -----------------
     Total stockholders' equity                                                                  8,066               10,121
                                                                                    ------------------    -----------------
TOTAL LIABILITES AND STOCKHOLDERS' EQUITY                                           $           10,633    $          20,045
                                                                                    ==================    =================
</TABLE>

See accompanying notes to consolidated financial statements


                                       3
<PAGE>
                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
        FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                  (UNAUDITED)
                     (IN THOUSANDS, EXCEPT LOSS PER SHARE)

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED               NINE MONTHS ENDED
                                                       SEPTEMBER 30,                   SEPTEMBER 30,
                                                   2004            2003            2004            2003
                                                ----------      ----------      ----------      ----------
<S>                                             <C>             <C>             <C>             <C>
REVENUES:
 Sanction fees                                  $       --      $    7,831      $       --      $   16,131
 Sponsorship revenue                                    --           2,623              --           6,591
 Television revenue                                     --             831              --           1,734
 Race promotion revenue                                 --           5,607              --          10,628
 Engine lease revenue                                   --             475              --           1,425
 Other revenue                                          63             803             167           2,233
                                                ----------      ----------      ----------      ----------
      Total revenues                                    63          18,170             167          38,742

EXPENSES:

 Race distributions                                     --          21,067              --          49,728
 Race expenses                                          --           2,589              --           6,530
 Race promotion expense                                 --           9,874              --          20,784
 Television expense                                     --           6,492              --          13,910
 Administrative and indirect expenses                  408           6,115           3,175          16,334
 Litigation expense                                     --           1,281              --           2,660
 Merger and strategic charges                           --           1,355              --           1,355
 Asset impairment                                                    3,299                           3,299
 Depreciation and amortization                          --             998              --           2,842
                                                ----------      ----------      ----------      ----------
      Total expenses                                   408          53,070           3,175         117,442

OPERATING LOSS                                        (345)        (34,900)         (3,008)        (78,700)
 Realized gain on sale of investments                   --             248              13             332
 Interest income                                        54             248             113           1,121
                                                ----------      ----------      ----------      ----------
LOSS BEFORE INCOME TAXES                              (291)        (34,404)         (2,882)        (77,247)
 Income tax expense (benefit)                           --              --            (877)            660
                                                ----------      ----------      ----------      ----------
NET LOSS                                        $     (291)     $  (34,404)     $   (2,005)     $  (77,907)
                                                ==========      ==========      ==========      ==========

NET LOSS PER SHARE:
              BASIC AND DILUTED                 $    (0.02)     $    (2.34)     $    (0.14)     $    (5.29)
                                                ==========      ==========      ==========      ==========
WEIGHTED AVERAGE SHARES OUTSTANDING:
              BASIC AND DILUTED                     14,718          14,718          14,718          14,718
                                                ==========      ==========      ==========      ==========
</TABLE>

See accompanying notes to consolidated financial statements.


                                       4
<PAGE>
                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
                                  (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                              COMMON STOCK    ADDITIONAL              ACCUMULATED OTHER
                                              ------------     PAID-IN   ACCUMULATED    COMPREHENSIVE    STOCKHOLDERS' COMPREHENSIVE
                                            SHARE     AMOUNT   CAPITAL     DEFICIT      INCOME (LOSS)        EQUITY        LOSS
                                            -----     ------   -------     -------      -------------        ------        ----
<S>                                         <C>       <C>     <C>        <C>          <C>                <C>           <C>
BALANCES, JANUARY 1, 2004                   14,718     $147    $87,765     $(77,841)          $50           $10,121
   Net loss                                     --       --         --       (2,005)           --            (2,005)     $(2,005)
   Reclassification of an unrealized gain       --       --         --           --           (50)              (50)         (50)
                                                                                                                         -------
   Comprehensive loss                           --       --         --           --            --                --      $(2,055)
                                            ------     ----    -------     --------           ---            ------      =======
BALANCES, SEPTEMBER 30, 2004                14,718     $147    $87,765     $(79,846)          $--            $8,066
                                            ======     ====    =======     ========           ===            ======
</TABLE>

See accompanying notes to consolidated financial statements.


                                       5
<PAGE>
                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                  (UNAUDITED)
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                2004           2003
                                                                              --------       --------
<S>                                                                           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                                 $ (2,005)      $(77,907)
     Adjustments to reconcile net loss to
           net cash used in operating activities:
     Asset impairment                                                               --          3,299
     Depreciation and amortization                                                  --          3,123
     Bad debt allowance                                                           (422)            --
     Loss from sale of property and equipment                                       --            636
     Deferred income taxes                                                          --          1,127
     Changes in assets and liabilities that provided (used) cash (net of
     effects of purchase of Raceworks, LLC in 2003) :
           Accounts receivable                                                   1,607          1,120
           Note receivable                                                          --           (400)
           Prepaid expenses and other assets                                       468         (4,675)
           Income tax refundable                                                  (188)         9,392
           Other assets                                                            (13)            --
           Accounts payable                                                     (2,911)           339
           Accrued liabilities                                                     247          1,160
           Deferred revenue                                                        (13)         1,670
                                                                              --------       --------
                   Net cash used in operating activities                        (3,217)       (61,026)

CASH FLOWS FROM INVESTING ACTIVITIES:
     Payments for purchase of Raceworks, LLC (net of cash acquired)                 --           (462)
     Purchase of investments                                                        --         (7,254)
     Proceeds from sale of investments                                           7,306         68,761
     Notes receivable                                                               --           (623)
     Acquisition of property and equipment                                          --         (3,178)
     Proceeds from sale of property and equipment (net of cash sold)             3,039             81
                                                                              --------       --------
                Net cash provided by investing activities                       10,345         57,325

CASH FLOWS FROM FINANCING ACTIVITIES:
      Payments on notes payable                                                 (1,750)          (973)
                                                                              --------       --------
                Net cash used in financing activities                           (1,750)          (973)
                                                                              --------       --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             5,378         (4,674)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                 3,211          6,773
                                                                              --------       --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                    $  8,589       $  2,099
                                                                              ========       ========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
     Cash paid during the period for:
          Income taxes                                                        $     --       $    278
                                                                              ========       ========
          Interest                                                            $     --       $     --
                                                                              ========       ========
     Cash received during period from income tax refund                       $    694       $  9,392

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING
ACTIVITIES- During 2004, the Company has negotiated settlements with
certain Raceworks, LLC creditors which resulted in reductions to
trade account payables of approximately $640. During 2003, the
Company received property, equipment, and/or services of
approximately $616 in exchange for sponsorship privileges to the
providers. Also, during 2003, the Company issued a promissory note
of $722 in connection with the purchase of Raceworks, LLC.
</TABLE>

See accompanying notes to consolidated financial statements.


                                       6
<PAGE>
                      CHAMPIONSHIP AUTO RACING TEAMS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      BASIS OF PRESENTATION. The accompanying unaudited consolidated financial
statements have been prepared by management and, in the opinion of management,
contain all adjustments, consisting of normal recurring adjustments, necessary
to present fairly the financial position of Championship Auto Racing Teams, Inc.
and subsidiaries (the "Company") as of September 30, 2004 and December 31, 2003,
the results of its operations for the three and nine months ended September 30,
2004 and 2003, the statement of stockholder's equity for the nine months ended
September 30, 2004, and its cash flows for the nine months ended September, 2004
and 2003.

      The unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements included in the
Company's Form 10-K for the year ended December 31, 2003, filed with the
Securities and Exchange Commission.

      ORGANIZATION. CART, Inc., ("CART") (a Michigan corporation) was organized
as a not-for-profit corporation in 1978, with its main purpose being to promote
the sport of automobile racing, primarily open-wheel type racing cars. As of
January 1, 1992, the entity became a for-profit corporation and continued to use
the CART name.

      In December 1997, Championship Auto Racing Teams, Inc., (a Delaware
corporation) was formed to serve as a holding company for CART and its
subsidiaries (the "Reorganization"). Each outstanding share of common stock of
CART was acquired in exchange for 400,000 shares of common stock of the Company.
References to the "Company" mean Championship Auto Racing Teams, Inc. and its
subsidiaries.

      Championship Auto Racing Teams, Inc., through CART, its wholly-owned
subsidiary, owned, operated and sanctioned the open-wheel motorsports series
known in 2003 as the Bridgestone Presents the Champ Car World Series Powered By
Ford. CART was responsible for organizing, marketing and staging each of the
races in the Champ Car World Series. The Company also acted as a promoter at
certain events. The Company staged events at four different types of tracks,
including superspeedways, ovals, temporary road courses and permanent road
courses, each of which required different skills and disciplines from the
drivers and teams.

      On August 18, 2003, we publicly announced that we had received a proposal
from Open Wheel Racing Series ("Open Wheel") related to the acquisition of the
Company and that we were engaged in negotiations regarding a possible
transaction with Open Wheel.

      On August 24, 2003, we publicly announced that our board of directors had
instructed management to continue negotiating with Open Wheel with respect to
all terms related to a possible acquisition of the Company. The Company, Open
Wheel and their respective advisors continued to engage in negotiations
regarding the terms of a possible transaction and related definitive agreements.

      On September 10, 2003, representatives of the Company, Open Wheel and Open
Wheel Acquisition Corp., a wholly-owned subsidiary of Open Wheel, executed and
delivered the merger agreement and other related agreements and issued a joint
press release announcing the proposed transaction.


                                       7
<PAGE>
      On December 2, 2003, we announced that representatives of Open Wheel had
informed us that Open Wheel believed that a number of conditions of the pending
merger between the parties would not be satisfied by the time of the special
meeting of stockholders that was scheduled for December 19, 2003.

      On December 15, 2003, we announced that we had entered into an Asset
Purchase Agreement (the "Agreement") with Open Wheel. The Agreement would allow
Open Wheel to purchase the assets of CART, Inc. needed to operate the Champ Car
World Series and the stock of Pro-Motion Agency, Inc., our subsidiary that
operates the Toyota Atlantics series and CART Licensed Products, Inc., our
subsidiary that operates our licensed merchandise function. In addition, Open
Wheel would assume from us and CART, Inc. the rights and obligations under
certain promoter, sponsor and other contracts. Open Wheel stated that it
intended to continue to operate the Champ Car World Series and the Toyota
Atlantic series. The total consideration that would be paid under the agreement
was $3.0 million less $1.5 million in 2003 prize money to teams who were not
affiliated with Open Wheel; which was an obligation of CART, Inc. that would be
assumed by Open Wheel. The Agreement terminated the previously announced merger
agreement that we had entered into with Open Wheel on September 10, 2003.

      On December 16, 2003, CART, Inc. filed a petition under Chapter 11 of the
U.S. Bankruptcy Code in the United States Bankruptcy Court Southern District of
Indiana (RE CART, Inc., Case No. 03-23385-FJO-11).

      An Amendment by Interlineation (the "Amendment") with respect to the
Agreement was entered into on January 15, 2004 to reflect the change in
consideration and the assumption of certain claims.

      On February 13, 2004, the assets of CART, Inc, the stock of Pro-Motion
Agency, Inc. and CART Licensed Products, Inc., were sold to Open Wheel for total
cash consideration of $3.3 million, assumption of liabilities of $1.4 million in
2003 prize money to teams who were not affiliated with Open Wheel which was an
obligation of CART, Inc., forgiveness of $1.3 million in prize money due
principals of Open Wheel which was an obligation of CART, Inc. and the
assumption of certain promoter, sponsor and other contracts, pursuant to an
order of the bankruptcy court at a hearing held on January 28, 2004.

      CART, Inc. continues to operate as debtor-in-possession under the
Bankruptcy Code in order to wind up its affairs. On August 3, 2004 CART, Inc.
filed CART's Amended Chapter 11 Plan (the "Plan") and the Second Amended
Disclosure Statement For Amended Chapter 11 Plan Of CART, Inc. (the "Disclosure
Statement") with the Bankruptcy Court. The Plan provides for the distribution of
the asset sale proceeds and other currently available cash and the liquidation
and distribution of the remaining estate assets to CART, Inc.'s creditors. The
Disclosure Statement was approved as containing adequate information by the
Bankruptcy Court on August 3, 2004. The hearing on the confirmation of the plan
was held on September 13, 2004. On September 23, 2004, the Bankruptcy Court
entered its Findings Of Fact, Conclusions Of Law, And Order Under 11
U.S.C. Sections 1129(a) And (b) And Fed. R. Bankr. P. 3020 Confirming CART's
Amended Chapter 11 Plan.

      We currently intend to liquidate our remaining assets, pay off our
remaining liabilities, and complete the process of liquidation and winding up
the Company's affairs as soon as practicable. Our Board of Directors has not
adopted a plan of liquidation and dissolution at this time, but will consider
this option when the liquidation and bankruptcy of our subsidiary CART, Inc. is
complete and after approval by our shareholders. In the event that our Board of
Directors adopts a plan of liquidation and dissolution, we would expect to incur
liquidation expenses, in addition to payments of ongoing operating expenses and
settlement of existing or potential obligations. Liquidation expenses may
include, among others, employee salaries, severance and related costs, legal and
accounting fees, as well as payments to a liquidation trustee.


                                       8
<PAGE>
While we cannot currently make a precise estimate of the expenses, we believe
that a significant portion of our current cash may be required to pay the above
expenditures.

      The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed above, the Company's
intention to liquidate the remaining assets, pay off the remaining liabilities,
and complete the process of liquidation and dissolution of the Company's affairs
raise substantial doubt about its ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.

      Upon completion of the sale of substantially all of our operating assets
to Open Wheel in February 2004, most of our employees resigned and accepted
employment with Open Wheel and we ceased operations.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      PRINCIPLES OF CONSOLIDATION. The consolidated financial statements of the
Company for the three and nine months ended September 30, 2003, include the
financial statements of Championship Auto Racing Teams, Inc. and its
wholly-owned subsidiaries - CART, Inc. ("CART"), Pro-Motion Agency, Ltd. and
CART Licensed Products, Inc. As of March 7, 2003, the consolidated financial
statements also include the financial statements of Raceworks, LLC, a wholly
owned subsidiary (See Note 8). For the three and nine months ended September 30,
2004 the financial statements include the financial statements of Championship
Auto Racing Teams, Inc. and its wholly-owned subsidiaries - CART, Inc. (Debtor
in Possession) and Raceworks, LLC and through February 13, 2004, Pro-Motion
Agency, Ltd. and CART Licensed Products, Inc. All significant intercompany
balances have been eliminated in consolidation.

      BASIC AND DILUTED LOSS PER SHARE. Diluted per share amounts assume the
exercise of shares issuable under certain stock option plans when dilutive. Due
to losses from operations 810,000 and 1,321,002 shares were excluded from the
dilutive loss per share calculation due to their anti-dilutive effect for the
three and nine months ended September, 30, 2004 and 2003 respectively.

      ACCOUNTING PRONOUNCEMENTS. In January 2003, the FASB issued FASB
Interpretation No. 46 ("FIN 46") "Consolidation of Variable Interest Entity."
The term "variable interest" is defined in FIN 46 as "contractual, ownership or
other pecuniary interests in an entity that change with changes in the entity's
net asset value." Variable interests are investments or other interests that
will absorb a portion of an entity's expected losses if they occur or receive
portions of the entity's expected residual returns if they occur. The Company
does not expect the recognition provisions of FIN 46 to have a material impact
on the Company's financial position or results of operations.

      In March 2004, the Emerging Issues Task Force ("EITF") reached a consensus
on Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments." EITF 03-1 provides guidelines for the
evaluation and determination of whether a loss on certain investments is
other-than-temporary and requires certain additional quantitative and
qualitative disclosures pertaining to unrealized investment losses in a
company's annual financial statements. The provisions of EITF 03-1 became
effective for the Company in the third quarter 2004. The adoption did not have a
material effect on results of operations or financial position.

      STOCK BASED COMPENSATION. On December 31, 2002, the FASB issued SFAS No.
148, "Accounting for Stock-Based Compensation-Transition and Disclosure." This
statement amends SFAS No. 123, "Accounting for Stock-Based Compensation," to
provide alternative methods of transition for a voluntary change to the fair
value based methods of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of SFAS 123 to
require prominent


                                       9
<PAGE>
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results.

      As permitted by SFAS No. 123, the Company has chosen to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB No. 25") in accounting for its stock options granted to employees and
directors. Under APB No. 25, the Company does not recognize compensation expense
on the issuance of its stock options because the option terms are fixed, and the
exercise price equals the market price of the underlying stock on the grant
date.

      However, as required by SFAS No. 123, companies who have chosen to follow
APB No. 25 are required to calculate pro forma information as if it had
calculated compensation based on the fair value at the grant date for its stock
options granted to employees and directors. In the third quarter of 2004 and
2003, there was no compensation expense under APB No. 25.

<TABLE>
<CAPTION>
      (In Thousands)
                                                                   Three Months Ended          Nine Months Ended
                                                                      September 30,              September 30,
                                                                   2004          2003          2004         2003
                                                                ----------    ----------    ----------   ----------
<S>                                                             <C>           <C>           <C>          <C>
NET LOSS
--------
As reported                                                     $     (291)   $  (34,404)   $   (2,005)  $  (77,907)
Total stock-based employee compensation expense determined
    under the fair value based method, net of tax                     (399)         (503)       (1,177)      (1,644)
                                                                ----------    ----------    ----------   ----------
Pro forma                                                       $     (690)   $  (34,907)   $   (3,182)  $  (79,551)
                                                                ==========    ==========    ==========   ==========

BASIC AND DILUTED LOSS PER SHARE
--------------------------------
As reported                                                     $    (0.02)   $    (2.34)   $    (0.14)  $    (5.29)
Total stock-based employee compensation expense determined
    under the fair value based method, net of tax                    (0.03)        (0.03)        (0.08)       (0.11)
                                                                ----------    ----------    ----------   ----------
Pro forma                                                       $    (0.05)   $    (2.37)   $    (0.22)  $    (5.40)
                                                                ==========    ==========    ==========   ==========
</TABLE>

      RECLASSIFICATIONS. Certain reclassifications have been made to the 2003
unaudited consolidated financial statements in order for them to conform to the
2004 presentation.

      MANAGEMENT ESTIMATES. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period presented. The actual
outcome of the estimates could differ from the estimates made in the preparation
of the consolidated financial statements.

3. SHORT-TERM INVESTMENTS

      The following is a summary of the estimated fair value of
available-for-sale short-term investments by balance sheet classification:

<TABLE>
<CAPTION>
                                                                  GROSS UNREALIZED
                                                                  ----------------
(IN THOUSANDS)                            COST     FAIR VALUE     GAIN        LOSS
--------------                            ----     ----------     ----        ----
DECEMBER 31, 2003
-----------------
<S>                                      <C>         <C>          <C>         <C>
U.S. agencies securities                 $7,306      $7,356       $ 50        $ --
                                         ======      ======       ====        ==
</TABLE>


                                       10
<PAGE>
      Net proceeds from sales of investments for the nine months ended September
30, 2004 and 2003 were approximately $7.3 million and $68.8 million,
respectively.

4. NOTES RECEIVABLE

      In June 2003, the Company entered into an amendment to a sanction
agreement with a promoter where we accepted a note in the amount of $400,000 as
payment for a portion of the sanction fee. This note is payable in 36 equal
monthly installments, bearing interest at 10% per annum, beginning January 1,
2004. The note is collateralized by all products and proceeds of all other
events staged by the promoter at the promoter's facility. We have not received
any payments on the note which were to begin on January 1, 2004. After an
assessment of the financial condition of the promoter and other considerations
it was determined the note should be written-down to management's estimate of
its net realizable value of $150,000 at December 31, 2003.

5.  PROPERTY AND EQUIPMENT

      Property and equipment consisted of the following at September 30, 2004
and December 31, 2003:

<TABLE>
<CAPTION>
                                                      (IN THOUSANDS)
                                               SEPTEMBER 30,    DECEMBER 31,   USEFUL LIFE
                                                   2004            2003         (IN YEARS)
                                               -------------    ------------   ---------------------------------
<S>                                            <C>              <C>            <C>
      Engines                                       $     --        $  2,273   2
      Equipment                                          112           5,251   5-20
      Furniture and fixtures                              --             248   10
      Vehicles                                            --           2,377   5-7
      Other                                               --             154   5 (except leasehold improvements)
                                               -------------    ------------
      Total                                              112          10,303

      Less accumulated depreciation                      (42)         (5,318)
                                               -------------    ------------

      Property and equipment (net)                  $     70        $  4,985
                                               =============    ============
</TABLE>

      Property and equipment were written down to their fair values as of
December 31, 2003, pursuant to an Asset Purchase Agreement entered into with
Open Wheel Racing Series, LLC. At September 30, 2004, the remaining assets
relate to our subsidiary Raceworks, LLC. These items are currently idle and not
currently in service.

6. SEGMENT REPORTING

      The Company had two reportable segments, sanctioning and race promotions
which was added in 2003. There were no prior period adjustments relating to the
new reportable segment.

      Sanctioning encompasses all the business operations of organizing,
marketing and staging all of our open-wheel racing events when we acted as a
sanctioning body as well as corporate expenses. We received a sanction fee from
the event promoter for our services that is either fixed or is based upon a
profit sharing agreement. Sanction fees revenue, sponsorship revenue, television
revenue, engine lease revenue, race distributions and race expenses, television
expenses and administrative and indirect expenses are recognized in the
sanctioning segment.


                                       11
<PAGE>
      Race promotions encompasses all the business operations of marketing and
promoting our open-wheel racing events when we acted as promoter and have
exclusive rights to the event. We received the revenues from the event and were
responsible for the expenses of the event.

      The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. The Company's long-lived assets
were substantially used in the sanctioning segment in the United States. The
Company evaluates performance based on income (loss) before income taxes.

      Because we have ceased operations and intend to liquidate our remaining
assets we no longer have race promotion activity. All significant activity
during 2004 can be characterized as corporate activities.

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED SEPTEMBER 30,
                                                      --------------------------------
(in thousands)                              SANCTIONING   RACE PROMOTIONS    OTHER*     TOTAL
                                            -----------   ---------------    ------     -----
<S>                                         <C>           <C>                <C>      <C>
2003
----
Revenues                                        $12,502            $5,607     $ 61    $ 18,170
Interest income (net)                               246                --        2         248
Depreciation and amortization                       991                --        7         998
Segment income (loss) before income taxes       (26,845)           (7,566)       7     (34,404)
</TABLE>

<TABLE>
<CAPTION>
                                                      NINE MONTHS ENDED SEPTEMBER 30,
                                                      -------------------------------
(in thousands)                              SANCTIONING   RACE PROMOTIONS    OTHER*     TOTAL
                                            -----------   ---------------    ------     -----
<S>                                         <C>           <C>                <C>      <C>
2003
----
Revenues                                        $27,847           $10,628     $267    $ 38,742
Interest income (net)                             1,113                --        8       1,121
Depreciation and amortization                     2,798                --       44       2,842
Segment income (loss) before income taxes       (63,905)          (13,455)     113     (77,247)
</TABLE>

* Segment is below quantitative thresholds for presentation as a reportable
segment. These amounts are related to the Company's licensing royalties for
2003.

Reconciliations to consolidated financial statement totals are as follows:

<TABLE>
<CAPTION>
      (in thousands)                                            DECEMBER 31,
                                                                    2003
<S>                                                             <C>
      Total assets for sanctioning segment                      $     18,925
      Total assets for race promotion segment                            894
      Other assets                                                       226
                                                                ------------
      Total consolidated assets                                 $     20,045
                                                                ============
</TABLE>

      Operating results and cash flows of the race promotions segment were
significantly lower than expected during the quarter ended September 30, 2003.
Based on those results and other qualitative information, the future earnings
forecasts were revised. The Company recognized a non-cash asset impairment
charge of $1,262,000 to write-off goodwill and other intangible assets of the
race promotions segment. The fair value of the reporting unit was estimated
using the present value of expected future cash flows. The Company also
recognized a non-cash asset impairment charge of $2,038,000 to reduce the
carrying value of the property and equipment of the race promotions segment. In
the absence of quoted market prices, the fair values of the property and
equipment were determined using estimates of amounts at which the assets could
be sold to third parties in current transactions, less any sale costs.


                                       12
<PAGE>
7. COMMITMENTS AND CONTINGENCIES

      LITIGATION. On November 4, 2003, 88 Corp. filed suit against CART, Inc. in
the United States Federal District Court for the Central District of California.
88 Corp., the promoter of the CART Champ Car World Series race at the California
Speedway in Fontana, California, claimed that the race which was to be held on
November 2, 2003 was canceled due to a "force majeure" and requested a judicial
determination as to whether or not the organizational and rights fee of $2.5
million, previously paid by 88 Corp. to CART, minus reasonable expenses incurred
by CART, should be refunded to 88 Corp. As a result of the bankruptcy of CART,
this litigation was suspended. 88 Corp. has filed a proof of claim against CART
in the bankruptcy court proceedings requesting repayment of the $2.5 million,
imposition of a constructive trust, and such other relief as the bankruptcy
court deems appropriate. CART has objected to the claim and has asserted against
88 Corp. a claim for wrongful termination of the sanction agreement as it
relates to the 2003 and 2004 races in the amount of $5.2 million. These claims
are currently pending in bankruptcy court and we are unable to make a
determination as to the likelihood of an unfavorable outcome or estimate the
amount or range of the recovery or loss and no amounts have been recorded in the
financial statements.

      On December 16, 2003, CART, Inc., the Company's wholly owned subsidiary,
filed for protection under Chapter 11 of the Bankruptcy Code in the United
States Bankruptcy Court, Southern District of Indiana, Indianapolis Division.
CART, Inc.'s Chapter 11 Plan was filed with the Bankruptcy Court on August 3,
2004. The hearing on confirmation of the plan was held on September 13, 2004. On
September 23, 2004, the Bankruptcy Court confirmed CART's Amended Chapter 11
Plan. Based upon filings by creditors of CART, Inc., there may be claims by
creditors against CART, Inc. which could result in litigation against CART, Inc.
in Bankruptcy Court. The Company is currently unable to determine the extent of
these asserted claims and whether or not they will ultimately result in
litigation involving CART, Inc. and the Company.

            On December 12, 2003, S. R. Holdings Co., filed an action against
the Company and Raceworks, LLC, its wholly owned limited liability company, for
an alleged breach of contract to provide concession services at the Champ Car
World Series race held in Miami, Florida in 2003 and in future years. The case
was filed in the Circuit Court of Miami, Dade County, Florida. The Company and
S. R. Holdings Co. have agreed to settle all claims for a payment by the Company
of approximately $20,000. The parties are finalizing the settlement agreement
and dismissal of the lawsuit.

      On August 5, 2004, the Company was served with a complaint to avoid and
recover preferential transfers filed on behalf of WorldCom, Inc. and MCI, Inc.,
in the United States Bankruptcy Court for the Southern District of New York. The
action alleges that the Company received $1,500,000 in July of 2002 which was a
payment within 90 days of the date that WorldCom, Inc. and its subsidiaries
commenced their bankruptcy by filing under Chapter 11 of the Bankruptcy Code.
The Company has not filed an answer at this point in time and is unable to make
a determination as to the likelihood of an unfavorable outcome. The range of the
possible loss is up to $1,500,000.

      As we have previously reported, we are party to several lawsuits. We
cannot predict the outcome of the litigation, and at this time, management is
unable to estimate the impact that ultimate resolution of these matters may have
on our financial position or future results of operations.

8. RACEWORKS, LLC

      On March 7, 2003, the Company acquired one hundred percent (100%) of the
membership interests in Raceworks, LLC ("Raceworks"). The results of Raceworks'
operations have been included in the consolidated financial statements since
that date. Raceworks was a motorsports promotion company


                                       13
<PAGE>
and held a revocable license agreement to annually conduct a street race in
downtown Miami through 2017, with an option to extend for an additional ten (10)
years. The aggregate purchase price was $1.2 million including $473,000 of cash
and a promissory note of $722,000.

            The following table summarizes the estimated fair values, at the
date of acquisition, of the assets acquired and liabilities assumed as part of
the acquisition.

<TABLE>
<S>                                                       <C>
          Current assets                                  $   449,000
          Property and equipment                            4,120,000
          Other assets                                         36,000
          Intangible assets including goodwill              1,262,000
                                                          -----------
                      Total assets acquired                 5,867,000
                                                          -----------
          Current liabilities                              (1,916,000)
          Long-term debt                                   (2,778,000)
                                                          -----------
                      Total liabilities assumed            (4,694,000)
                                                          -----------
          Net assets acquired                             $ 1,173,000
                                                          ===========
</TABLE>

      The acquisition was accounted for using the purchase method of accounting.
Under purchase accounting, the total purchase price has been allocated to the
tangible and intangible assets and liabilities of Raceworks based upon their
respective fair values as of the date of the acquisition. An allocation of the
purchase price has been made to major categories of assets and liabilities based
on available information.

      Operating results and cash flows of Raceworks were significantly lower
than expected during the quarter ended September 30, 2003, which we considered
to be an indication of impairment. Based on those results and other qualitative
information, the future earnings forecasts were revised and the fair value
determined. The Company recognized a non-cash asset impairment charge of
$1,262,000 to write-off goodwill and other intangible assets related to the
purchase of Raceworks. The fair value of the reporting unit was estimated using
the present value of expected future cash flows.

      The Company reviewed the carrying value of the long-lived assets of
Raceworks at September 30, 2003, using estimated cash flows. The carrying values
of the long-lived assets were considered impaired. In the absence of quoted
market prices, the fair values of the long-lived assets were determined using
estimates of amounts at which the assets could be sold to third parties in
current transactions, less any sale costs. The Company recognized a non-cash
asset impairment charge of $2,038,000 for the period ended September 30, 2003 to
reduce the carrying value of the property and equipment of Raceworks.

      In December 2003, Raceworks' operations were discontinued and a wind-up of
business is currently under way due to CART, Inc.'s filing bankruptcy and the
subsequent sale of its assets to Open Wheel and CART, Inc.'s and Open Wheel's
decision not to continue racing in Miami.

9. LONG TERM DEBT

      In July 2002, the Company guaranteed a $1.8 million commercial term loan
in connection with the operations of Raceworks, LLC. The Company subsequently
assumed this loan in conjunction with the acquisition of Raceworks, LLC. The
principal on the loan was to be paid quarterly, commencing on October 31, 2003
and on the last day of each January, April, July and October thereafter, in the
amount of $50,000 per quarter. Payments of $50,000 each were made in October
2003 and January 2004. On May 10, 2004, The Company entered into an assignment
and release agreement that was for full and final settlement of any and all
obligations related to the loan in exchange for a cash payment from the Company
of the remaining principal balance of $1,700,000, which was paid in full on May
7, 2004.


                                       14
<PAGE>
10. DEFERRED TAXES

      SFAS No. 109 requires that net deferred tax assets be reduced by a
valuation allowance if, based on the weight of available evidence, it is more
likely than not that some portion or all of the net deferred tax asset will not
be realized. At September 30, 2004, the Company had a deferred tax asset from
U.S. net operating loss carryforwards of $30.5 million. This carryforward will
expire in 20 years. Failure to achieve taxable income within the carryforward
period would affect the ultimate realization of the net deferred tax asset. Due
to the financial condition of the Company described in Note 1, management does
not believe that the deferred tax assets will be realized. Therefore, the tax
benefit for current year losses and net deferred tax assets recorded at
September 30, 2004 have been reduced by a full valuation allowance. The tax
benefit recorded for the nine months ended September 30, 2004 represents
management's estimate for tax refunds expected to be received by the Company
through the utilization of net operating loss carryback claims previously deemed
not realizable.

11. CART, INC. BANKRUPTCY

CART, Inc. Bankruptcy:

      On December 16, 2003, CART, Inc., the Company's largest subsidiary that
operated the Champ Car World Series, filed a voluntary petition under Chapter 11
of the U.S. Bankruptcy Code in the United States Bankruptcy Court Southern
District of Indiana (RE CART, Inc., Case No. 03-23385-FJO-11).

      In the Chapter 11 case, substantially all of the liabilities as of the
filing date are subject to compromise. The following table sets forth a break
down of these liabilities:

<TABLE>
<CAPTION>
   Liabilities Subject to Compromise                    In thousands
                                          September 30, 2004   December 31, 2003
<S>                                                   <C>                 <C>
Accounts Payable                                      $1,900              $4,848
Accrued Payroll                                          274                  68
Other Accrued Payables                                    97                 710
                                                      ------              ------
Total liabilities subject to compromise               $2,271              $5,626
                                                      ======              ======
</TABLE>

      Liabilities subject to compromise have been reduced from December 31, 2003
due to the following:

      In January 2004, the bankruptcy court approved payments related to
pre-petition employee expense reimbursements and health benefits in the amount
of $28,327.

      On February 13, 2004, the assets of CART, Inc, the common stock of
Pro-Motion Agency, Inc. and CART Licensed Products, Inc., were sold to Open
Wheel for total cash consideration of $3.3 million less cash sold of $221,000.
The agreement also included Open Wheel assuming $1.4 million in 2003 prize money
to teams who were not affiliated with Open Wheel and forgiveness of $1.3 million
in prize money due principals of Open Wheel; all of the 2003 prize money was an
obligation of CART, Inc., and included in liabilities subject to compromise at
December 31, 2003. In addition, Open Wheel assumed certain promoter, sponsor and
other contracts. Prior to finalizing the sale, CART, Inc. paid pre-petition
payables in the amount of $492,000 related to the contracts assumed by Open
Wheel. The sale agreement was pursuant to an order of the bankruptcy court at a
hearing held on January 28, 2004. Other contracts assumed by Open Wheel and
settlements entered into in the first quarter of 2004, reduced liabilities
subject to compromise by $162,000 and $180,000 respectively. The reduction was
offset by an increase in accrued payroll of $207,000 related to terminated
employment contracts.


                                       15
<PAGE>
      A substantial dollar amount of claims were filed that are not included in
CART, Inc.'s liabilities as of September 30, 2004. The total amount of claims
filed by potential creditors and debtor scheduled amounts with the bankruptcy
court totaled $12.2 million, excluding the inter-company liability to CART,
Inc's parent company, Championship Auto Racing Teams, Inc. of $61.5 million. The
total claims exceed the liabilities recorded on CART's balance sheet because the
total claims represent not only accounts payable to each potential creditor but
also claims for future payments, disputed amounts owed to creditors, and
potential damages for contractual breaches. The following table sets forth
claims filed by potential creditors that are not included in CART, Inc.'s
liabilities as of September 30, 2004:

<TABLE>
<CAPTION>
    Claims Not included in Liabilities at September 30, 2004:            In thousands
<S>                                                                      <C>
88-Corporation-cancellation by promoter of Fontana race                        $2,500
Brands Hatch Circuits, Ltd.-termination of race promotion agreement             1,150
S.R. Holdings  - concession contract for Raceworks, Inc.                        1,000
Employment related contracts                                                      500
IMG Motorsports-Cleveland, Inc.-Cleveland race promotion                          438
Stars of Tomorrow-Promotion agreement                                             325
Other Claims                                                                      500
                                                                               ------

Total                                                                          $6,413
                                                                               ======
</TABLE>

      Championship Auto Racing Teams, Inc. the parent company of CART, Inc., has
entered into an agreement whereby it will subordinate its claim for the
inter-company liability to the other creditors in exchange for the agreement of
the unsecured creditors of CART releasing the Company from all claims that could
be asserted against the Company.

      CART, Inc. continues to operate as debtor-in-possession under the
Bankruptcy Code in order to wind up its affairs. On August 3, 2004 CART, Inc.
filed CART's Amended Chapter 11 Plan (the "Plan") and the Second Amended
Disclosure Statement For Amended Chapter 11 Plan Of CART, Inc. (the "Disclosure
Statement") with the Bankruptcy Court. The Plan provides for the distribution of
the asset sale proceeds and other currently available cash and the liquidation
and distribution of the remaining estate assets to CART, Inc.'s creditors. The
Disclosure Statement was approved as containing adequate information by the
Bankruptcy Court on August 3, 2004. The hearing on the confirmation of the plan
was held on September 13, 2004. On September 23, 2004, the Bankruptcy Court
entered its Findings Of Fact, Conclusions Of Law, And Order Under 11
U.S.C. Sections 1129(a) And (b) And Fed. R. Bankr. P. 3020 Confirming CART's
Amended Chapter 11 Plan.

      An initial distribution of $307,000 was made to CART, Inc.'s creditors on
October 8, 2004 according to the confirmed Plan.

      The following reflects unaudited balance sheet, statement of operations
and statement of cash flows information as of and for the three and nine months
period ended September 30, 2004 for CART, Inc.:


                                       16
<PAGE>
                                   CART, INC.
                              DEBTOR IN POSSESSION
                            CONDENSED BALANCE SHEET
                            AS OF SEPTEMBER 30, 2004
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                             SEPTEMBER 30, 2004
                                                             ------------------
<S>                                                          <C>
ASSETS
Current Assets:
       Cash and Cash Equivalents                                        $ 3,732
       Accounts Receivable (net of allowance of $1,620)                     598
       Note Receivable                                                      150
       Prepaid Expenses                                                       2
                                                             ------------------
Total Current Assets                                                      4,482
Total Assets                                                            $ 4,482
                                                             ==================

LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Current Liabilities:
         Accounts Payable                                               $    --
         Payroll                                                             --
         Other                                                               76
                                                             ------------------
Liabilities of CART, Inc. subject to compromise                           2,271
Total Current Liabilities                                                 2,347
Inter-company Payable-Championship Auto Racing Teams, Inc.               61,564
                                                             ------------------
Total Liabilities                                                       $63,911

Stockholder's Deficiency:
Common Stock                                                                102
Additional Paid In Capital                                               15,975
Accumulated Deficit                                                     (75,506)
                                                             ------------------
Total Stockholder's Deficiency                                          (59,429)
                                                             ------------------
Total Liabilities and Stockholder's Deficiency                          $ 4,482
                                                             ==================
</TABLE>

                                   CART, INC.
                              DEBTOR IN POSSESSION
                       CONDENSED STATEMENT OF OPERATIONS
             FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004
                             (DOLLARS IN THOUSANDS)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                       Three Months Ended      Nine Months Ended
                                           September 30,         September 30,
                                           ------------          ------------
<S>                                    <C>                     <C>
REVENUES:
Other revenue                              $         63          $        148
                                           ------------          ------------
Total revenues                                       63                   148

EXPENSES:
Administrative and indirect expenses                 51                 1,561
                                           ------------          ------------
OPERATING INCOME (LOSS)                              12                (1,413)
Interest income                                      14                     7
                                           ------------          ------------
NET INCOME (LOSS)                          $         26          $     (1,406)
                                           ============          ============
</TABLE>


                                       17
<PAGE>
                                   CART, INC.
                            STATEMENT OF CASH FLOWS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                                                       Unaudited
                                                                       ---------
<S>                                                                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net Loss                                                         $  (1,406)
      Changes in asset and liabilities that provided (used) cash:
              Accounts and notes receivable                                  727
              Prepaid expenses and other assets                              347
              Accounts payable                                              (494)
              Accrued liabilities                                           (257)
                                                                       ---------
Net cash used in operating activities                                     (1,083)

CASH FLOWS FROM INVESTING ACTIVITIES:
      Proceeds from sale of property and equipment                         3,260
                                                                       ---------
Net cash provided by investing activities                                  3,260

CASH FLOWS FROM FINANCING ACTIVITIES:
       Payments of Inter-company payables                                   (425)
                                                                       ---------
Net cash used in financing activities                                       (425)

NET INCREASE IN CASH AND CASH EQUIVALENTS                                  1,752
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                           1,980
                                                                       ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                             $   3,732
                                                                       =========
</TABLE>


                                       18
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

      Upon completion of the sale of substantially all of our operating assets
to Open Wheel in February 2004, most of our employees resigned and accepted
employment with Open Wheel and we ceased operations. We cannot list here all the
risks and uncertainties that could cause our financial results to differ
materially from our present expectations or projections regarding the estimated
distribution to shareholders, but we can identify many of them. These are set
forth in "Factors That May Affect Future Results."

      The following information is presented primarily for historical purposes
and should be read noting that the Company is no longer involved in an active
business.

CRITICAL ACCOUNTING POLICIES

Use of Estimates

      The following discussion and analysis of our financial condition and
results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting periods.

      Significant accounting estimates include the allowance for doubtful
accounts for trade accounts receivable, impairment of fixed assets and deferred
race expenses, the recoverability of intangible assets and goodwill, income
taxes and related valuation allowances, certain accrued liabilities and fair
values allocated to assets acquired and liabilities assumed in business
combinations.

      We believe that the estimates, assumptions and judgments involved in the
accounting policies described below have a material impact on our financial
statements. These areas are subject to the risks and uncertainties we describe
in this report. Actual results, therefore, could differ from those estimated.

Litigation

      We are involved in litigation as a part of our normal course of business
and as a result of CART, Inc.'s bankruptcy filing. Our litigation proceedings
are included in our most recent Form 10-K, Item 3: Legal Proceedings and
updated, as needed, in Part II-Other Information, Item 1: Legal Proceedings in
this and subsequent Form 10-Qs. When a complaint is filed by or against us that
represents a material claim, we disclose the proceeding in our financial
statements. When a claim against us is probable and reasonably estimable, we
record the expense. When we are the party filing the claim, we do not record
gain coningency until any damages from the claim are assured.

RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2004

      We plan to liquidate our remaining assets, pay off our remaining
liabilities and complete the process of liquidation and winding up the Company's
affairs as soon as practicable.

      In 2004, the only revenues the Company expects to receive are from
sanctioning revenues paid to us by Open Wheel for sanctioning their races for
the 2004 season, miscellaneous revenue and interest income from our remaining
cash and short-term investments. Sanctioning fees are $12,500 per domestic race.
As of September 30, 2004, Open Wheel had run eight sanctioned domestic races.


                                       19
<PAGE>
      Expenses will be incurred to complete the wind up of the Company. Wind up
expenses will be incurred for salaries and benefits, severance and related
expenses, office, legal, accounting and public company expenses. CART, Inc. will
also incur expenses related to setting up a liquidation trust and expenses of a
liquidation trustee as well as other expenses related to its Chapter 11
Bankruptcy filing.

      Total revenues were $63,000 for the three months ended September 30, 2004,
related to sanction fees.

      Total expenses were $408,000 for the three months ended September 30,
2004. Expenses consisted of legal and consulting fees of $200,000, salaries,
employee and related expenses of $219,000 and other office and miscellaneous
expenses and credits.

      Interest income from cash and short term investments for three months
ended September 30, 2004 was $54,000.

      Deferred tax assets recorded during the three month ended September 30,
2004, were completely reserved against, as management does not believe they will
be realized, therefore, no tax expense or benefit was recorded. Net loss was
$291,000.

RESULTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2004

      Total revenues were $167,000 for the nine months ended September 30, 2004,
related to sanction fees of $100,000, equipment rental of $12,000 and other
miscellaneous revenues of $55,000.

      Total expenses were $3.2 million for the nine months ended September 30,
2004. Administrative expenses consisted of normal operating expenses through,
February 13, 2004, the date the "Asset Purchase Agreement" was finalized.
Expenses consisted of legal and consulting fees of $1.9 million, salaries,
employee and severance related expenses of $1.4 million, offices expenses of
$135,000 and other miscellaneous expenses and credits.

      Interest income and realized gains on investments were $113,000 and
$13,000 respectively for the nine months ended September 30, 2004.

      Net loss before income taxes was $2.9 million. An income tax benefit of
$877,000 was recognized during the nine months ended September 30, 2004,
representing management's estimate for tax refunds expected to be received by
the Company through the utilization of net operating loss carryback claims
previously deemed not realizable. Net operating loss for the nine months ended
September 30, 2004 was $2.0 million.

RESULTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2003

REVENUES

      Prior to 2004, we derived revenues primarily from (i) sanction fees, (ii)
sponsorship, (iii) television rights, (iv) race promotion, (v) engine leases and
(vi) other revenue. Following is an explanation of our individual revenue items:

      SANCTION FEES. We received sanction fees from the promoters of our races
(other than races we promote). The fees are based on contracts between the
promoters and CART. We had entered into agreements with certain promoters of the
Champ Car World Series for a reduction in the previously


                                       20
<PAGE>
contracted sanction fees. In return, we were to receive a share of the net
income from the event. The percentage of net income, if any, was also included
in sanction fees. Therefore, there was less visibility and less predictability
for CART's earnings than in the previous financial model as CART's revenues were
affected by the success of these races.

      SPONSORSHIP REVENUE. We received corporate sponsorship revenue based on
negotiated contracts. An official corporate sponsor received status and
recognition rights, event rights and/or product category exclusivity.

      We developed an Entrant Support Program for the 2003 Champ Car World
Series. The program was part of an enhanced incentive program we developed with
our teams, whereby we provided financial support to new and existing teams to
run in the Champ Car World Series and, in exchange, each team provided logo
space on its cars for Champ Car-designated sponsors to advertise. Sponsorship
fees, if any, paid by these corporate sponsors were to be retained by us to
offset the financial support we were providing to the teams. The program was to
also combine Champ Car World Series event and team sponsorship opportunities,
along with advertising on television and in print media. None of these
sponsorship packages were sold in 2003.

      TELEVISION REVENUE. In 2003, we had contracts for our domestic television
rights with CBS and Speed Channel. We broadcasted seven races on CBS and eleven
on Speed Channel. One of our races was broadcast on HD Net TV where HD Net TV
provided the air time and we shared the cost of production. We bought the
air-time and paid for production for the CBS races. Speed Channel provided the
air-time for the races aired on its network, including Champ Car practice and
qualifying and a half-hour pre-race show. We paid for production for the races
to be broadcast on the Speed Channel network. We received the advertising
inventory for all shows aired on all networks and were responsible for selling
the advertising.

      In 2003, we had international television rights with:

      -     Gold Coast Motor Events Co. (Australia)
      -     Molstar (Canada)
      -     Promotion Entertainment of Mexico, LLC (Mexico)
      -     Octagon CSI (all others)

      A rights fee was paid to us by each international broadcast partner for
rights to air the Champ Car race either live, time-delayed or as a highlight
package, in the country where they held our rights. See "Other Related Party
Transactions" for a description of our arrangements with Promotion Entertainment
of Mexico, LLC, an entity principally owned by Mr. Gerald R. Forsythe, a 23%
stockholder of the Company.

      RACE PROMOTION REVENUE. In 2003, we promoted six of our races. Race
promotion revenue included all the commercial rights associated with promoting a
Champ Car event, such as admissions, event sponsorship and hospitality sales. In
most cases we partnered with experienced race promoters to promote these events
and we were responsible for selling all of the commercial rights of the event.

      ENGINE LEASE REVENUE. In 2002, we purchased the engines that were used for
the 2003 Champ Car World Series race season. Each team was required to use these
engines in order to compete in the series. We leased the engines to the teams
for $100,000 per car.

      OTHER REVENUE. Other revenue included membership and entry fees,
contingency awards money, royalties, commissions and other miscellaneous revenue
items. Membership and entry fees were payable by Toyota Atlantic Championship
competitors. In addition, we charged fees to competitors for credentials for all
team participants and driver license fees for all drivers competing in the
series. We received royalty


                                       21
<PAGE>
revenue for the use of the CART service marks and trademarks on licensed
merchandise that was sold both at tracks and at off-track sites. We received
commission income from the sale of chassis and parts to our support series
teams.

EXPENSES

      Prior to 2004, our expenses were incurred primarily in, (i) distributions
to our race teams: prize money, participation payments and team assistance, (ii)
race operations: expenses directly related to sanctioning the events, (iii) race
promotion: expenses related to races we promote, (iv) television: expenses
directly related to buying air time and production of our domestic and
international television programming and (v) administrative and indirect:
expenses related to administration, marketing, sales and public relations. Set
forth below is an explanation of the individual expense line items:

      RACE DISTRIBUTIONS. We paid the racing teams for their on-track
performance. Race distributions included the following for each event:

      -     event purse which was paid based on finishing position
      -     contingency award payments
      -     year-end point fund, which was paid based on year end finishing
            position
      -     participation payments
      -     entrant support payments
      -     team assistance

      We paid awards to the teams, based on their cumulative performance for the
season, out of the year-end point fund. Participation payments were made in 2003
to each of our entries on a per car, per race basis. In addition, entrant
support payments were made to participating teams as part of a financial
incentive plan to attract and retain teams to compete in our series. The
payments were made to teams in exchange for logo advertising space on their
cars. We had the opportunity to sell and retain the revenue from the
advertising. In 2003, we were providing assistance to certain teams to ensure
that there are a sufficient number of race cars competing in our series.

      RACE EXPENSES. We were responsible for officiating and administering all
of our events. Costs primarily included officiating fees, travel, per diem and
lodging expenses for the following officiating groups:

      -     medical services
      -     race administration
      -     race officiating and rules compliance
      -     registration
      -     safety
      -     technical inspection
      -     timing and scoring

      RACE PROMOTION EXPENSES. In 2003, we promoted six of our own events. Race
promotion expenses related to all costs associated with staging a Champ Car
event, including track rental, personnel costs and promotion of the event.

      TELEVISION EXPENSES. In 2003, we bought the air time for our seven CBS
races and a one hour preseason preview show at a cost of $3.5 million. Speed
Channel provided the air time for the races aired on its network, including
Champ Car practice and qualifying and a half-hour pre-race show. We paid for
production costs associated with the races to be broadcast on the Speed Channel
network. One of our races


                                       22
<PAGE>
was broadcast on HD Net TV which provided the air time and we shared the
production costs. We also incurred expenses for our international production for
all of our races.

      ADMINISTRATIVE AND INDIRECT EXPENSES. Administrative and indirect expenses
included all operating costs not directly incurred for a specific event,
including:

      -     administration
      -     marketing and advertising
      -     sponsorship sales and service
      -     public relations

      For the three months ended September 30, 2003, revenues were $18.2
million. Sanction fees were $7.8 million and were attributable to the races in
Toronto and Vancouver, Canada for $4.0 million, Montreal, Canada for $2.4
million, Elkhart Lake, WI $900,000 and Denver, CO $500,000. Sponsorship revenue
and engine lease revenue are recognized on a pro-rata basis and was $2.6 million
and $475,000, respectively, in the third quarter. Race promotion revenue was
$5.6 million. Television revenue for the races held in the quarter was $831,000
and miscellaneous revenue was $803,000.

      Expenses for the three months ended September 30, 2003 were $53.1 million.
Race distributions for the third quarter were $21.1 million, which consisted of
$6.4 million in purse and prize money and $14.7 million in team support and
assistance. Race operations and race promotion expenses were $2.6 million and
$9.9 million, respectively, for the quarter. Television expense was $6.5
million, administrative and indirect expenses were $6.1 million, litigation
expense was $1.3 million, asset impairment charges were $3.3 million, merger
strategic charges were $1.4 million and depreciation and amortization was $1.0
million for the three months ended September 30, 2003.

      Operating loss for the quarter ended September 30, 2003 was $34.9 million.
Interest income and realized gains on investment was $248,000 and $248,000
respectively. Loss before income taxes was $34.4 million. No income tax expense
or benefit was recorded during the quarter. Due to the financial condition of
the Company management did not believe that deferred tax assets would be
realized. A net loss of $34.4 million resulted due to the items discussed above
for the three months ended September 30, 2003.

RESULTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2003

      For the nine months ended September 30, 2003, revenues were $38.7 million.
Sanction fees were $16.1 million and were attributable to the races in St.
Petersburg, Florida, $500,000, Monterrey, Mexico $2.5, Long Beach, CA $2.5
million, Milwaukee, WI and Monterrey, CA for $1.4 million each, Toronto and
Vancouver, Canada for $4.0 million, Montreal, Canada for $2.4 million, Elkhart
Lake, WI $900,000 and Denver, CO $500,000. Sponsorship revenue and engine lease
revenue are recognized on a pro-rata basis and was $6.6 million and $1.4
million, respectively in the quarter. Television revenue for the races held
during the nine months ended September 30, 2003 was $1.7 million and
miscellaneous revenue was $2.2 million.

      Expenses for the nine months ended September 30, 2003 were $117.4 million.
Race distributions for the quarter were $49.7 million which consisted of $12.3
million in purse and prize money and $37.4 million in team support and
assistance. Race operations and race promotion expenses were $6.5 million and
$20.8 million respectively for the quarter. Television expense was $13.9
million, administrative and indirect expenses were $16.3 million, litigation
expense was $2.7 million, merger and strategic charges was $1.4 million, asset
impairment charges were $3.3 million and depreciation and amortization was $2.8
million for the nine months ended September 30, 2003.


                                       23
<PAGE>
      Operating loss for the nine months ended September 30, 2003 was $78.7
million. Realized gain on investments for the quarter was $332,000 and interest
income was $1.1 million. Income tax expense of $660,000 was recognized for the
nine months ended September 30, 2003. A net loss of $77.9 million resulted due
to the items discussed above for the nine months ended September 30, 2003.

LIQUIDITY AND CAPITAL RESOURCES

      We currently intend to liquidate our remaining assets, pay off our
remaining liabilities and complete the process of liquidation and winding up the
Company's affairs. Our Board of Directors has not adopted a plan of liquidation
and dissolution at this time but will consider this option when the liquidation
and bankruptcy of our subsidiary, CART, Inc., is complete. In the event that our
Board of Directors adopts a plan of liquidation and dissolution, we would expect
to incur liquidation expenses, in addition to payments of ongoing operating
expenses and settlement of existing or potential obligations. Liquidation
expenses may include, among others, employee salaries, severance and related
costs, legal and accounting fees, as well as payments to a liquidation trustee.
While we cannot currently make a precise estimate of the expenses, we believe a
significant portion of our current cash may be required to pay the above
expenditures.

      Since our inception, we have funded our operations and capital
expenditures from the proceeds of our public offerings and our cash reserves
generated from operations. At September 30, 2004, we had $8.0 million in working
capital, and our primary source of liquidity was $8.6 million in cash and cash
equivalents. Our cash balance on September 30, 2004 was $8.6 million, a net
increase of $5.4 million from December 31, 2003. This increase was primarily the
result of net cash provided by the sale of certain CART, Inc. assets to Open
Wheel of $3.0 million and the sale of investments of $7.3 million, partially
offset by net cash used in operating activities of $3.2 million and repayment of
the Raceworks, LLC note payable of $1.7 million.

      Our short term investment balance on September 30, 2004 was $0, a net
decrease of $7.3 million from December 31, 2003. This decrease was primarily due
to funding our operations during the nine months ended September 30, 2004 and
the conversion of short term investments into cash and cash equivalents.

      In April 2002, we entered into a lease for our new corporate headquarters
in Indianapolis, Indiana. The lease commenced on May 1, 2002 and expires on
October 31, 2010. The total amount due through the life of the lease as of
September 30, 2004 is $1.9 million. We have sublet this office space to Open
Wheel, and retain office space for our use, at no cost. However, we remain
liable on the lease.

<TABLE>
<CAPTION>
                                                        Payments due by Period
                                                        ----------------------
                                                   Less Than      1-3         4-5       After 5
Contractual Obligations                  Total       1 Year      Years       Years       Years
                                      ----------    --------    --------    --------    --------
<S>                                   <C>           <C>         <C>         <C>         <C>
Operating Leases*                     $1,879,537    $308,965    $617,930    $617,930    $334,712
                                      ----------    --------    --------    --------    --------
Total Contractual Cash Obligations    $1,879,537    $308,965    $617,930    $617,930    $334,712
                                      ==========    ========    ========    ========    ========
</TABLE>

* Sublet to Open Wheel Racing Series for the amounts of lease obligations.


                                       24
<PAGE>
FACTORS THAT MAY AFFECT FUTURE RESULTS

WE CANNOT ASSURE YOU OF THE AMOUNT, IF ANY, OF ANY DISTRIBUTION TO OUR
STOCKHOLDERS UNDER A PLAN OF COMPLETE LIQUIDATION AND DISSOLUTION.

      Liquidation and dissolution may not create value to our stockholders or
result in any remaining capital for distribution to our stockholders. We cannot
assure you of the precise nature and amount of any distribution to our
stockholders pursuant to a plan of distribution. Uncertainties as to the precise
net value of our non-cash assets and the ultimate amount of our liabilities make
it impracticable to predict the aggregate net value, if any, ultimately
distributable to our stockholders. The actual nature and amount of all
distributions will depend in part upon our ability to settle our liabilities or
potential liabilities. We may not be successful in doing so to return a
meaningful amount of cash to our stockholders.

WE MAY NOT BE ABLE TO SETTLE ALL OF OUR OBLIGATIONS TO CREDITORS.

      We have current and future obligations to creditors. These include,
without limitation, long-term contractual obligations. As part of the wind down
process, we will attempt to settle our obligations with our creditors. We may
not, however, succeed in doing so. If we cannot reach an agreement with a
creditor concerning an obligation, that creditors may choose to bring a lawsuit
against us. Any litigation could delay or even prevent us from completing the
plan of dissolution. Moreover, amounts required to settle our obligations to
creditors will reduce the amount of remaining capital available for
distributions to stockholders.

WE WILL CONTINUE TO INCUR CLAIMS, LIABILITIES AND EXPENSES WHICH WILL REDUCE THE
AMOUNT AVAILABLE FOR DISTRIBUTION TO STOCKHOLDERS.

      Claims, liabilities and expenses from operations (such as operating costs,
salaries, directors' and officers' insurance, payroll and local taxes, legal,
accounting and consulting fees and miscellaneous office expenses) will continue
to be incurred as we wind down. These expenses will reduce the amount of assets
available for ultimate distribution to stockholders. If available cash is not
adequate to provide for our obligations, liabilities, expenses and claims, we
may not be able to distribute meaningful cash, or any cash at all, to our
stockholders.

DISTRIBUTION OF ASSETS, IF ANY, TO OUR STOCKHOLDERS COULD BE DELAYED.

      Our Board of Directors has not established a firm timetable for proposing
to our stockholders a plan of liquidation, nor can we assure approval of such a
plan or the amount of any distributions to our stockholders. We are currently
unable to predict the precise timing of any distribution, if any, pursuant to
our wind down. The timing of distribution, if any, will depend on and could be
delayed by, among other things, the timing of claim settlements with creditors
and potential litigation. Additionally, a creditor could seek an injunction
against the making of distributions to our stockholders on the ground that the
amounts to be distributed were needed to provide for the payment of our
liabilities and expenses. Additionally, we could seek protection from creditors
under the federal bankruptcy code. Any action of this type could delay or
substantially diminish, or eliminate, the amount available for distribution to
our stockholders.

IF WE FAIL TO CREATE AN ADEQUATE CONTINGENCY RESERVE FOR PAYMENT OF OUR EXPENSES
AND LIABILITIES, OUR STOCKHOLDERS COULD BE HELD LIABLE FOR PAYMENT TO OUR
CREDITORS OF EACH SUCH STOCKHOLDER'S PRO RATA SHARE OF


                                       25
<PAGE>
AMOUNTS OWED TO THE CREDITORS IN EXCESS OF THE CONTINGENCY RESERVE, UP TO THE
AMOUNT ACTUALLY DISTRIBUTED TO SUCH STOCKHOLDER.

      If a plan of dissolution is proposed to and ratified and approved by our
stockholders, we will file a Certificate of Dissolution with the State of
Delaware dissolving the Company. Pursuant to the Delaware General Corporation
Law, we will continue to exist for three years after the dissolution becomes
effective or for such longer period as the Delaware Court of Chancery shall
direct, for the purpose of prosecuting and defending suits against us and
enabling us gradually to close our business, to dispose of our property, to
discharge our liabilities and to distribute to our stockholders any remaining
assets. Under the Delaware General Corporation Law, in the event we fail to
create an adequate contingency reserve for payment of our expenses and
liabilities during this three-year period, each stockholder could be held liable
for payment to our creditors of such stockholder's pro rata share of amounts
owed to creditors in excess of the contingency reserve, up to the amount
actually distributed to such stockholder.

      However, the liability of any stockholder would be limited to the amounts
previously received by such stockholder from us (and from any liquidating trust
or trusts) in the dissolution. Accordingly, in such event a stockholder could be
required to return all distributions previously made to such stockholder. In
such event, a stockholder could receive nothing from us under the plan of
dissolution. Moreover, in the event a stockholder has paid taxes on amounts
previously received, a repayment of all or a portion of such amount could result
in a stockholder incurring a net tax cost if the stockholder's repayment of an
amount previously distributed does not cause a commensurate reduction in taxes
payable. There can be no assurance that the contingency reserve established by
us will be adequate to cover any expenses and liabilities.

WE DO NOT EXPECT TO RECOGNIZE ANY MATERIAL REVENUE IN THE FUTURE

      We do not expect to recognize much, if any, additional revenue.
Furthermore, it may be difficult to collect receivables now that we have
announced our intent to wind down.

WE WILL CONTINUE TO INCUR THE EXPENSES OF COMPLYING WITH PUBLIC COMPANY
REPORTING REQUIREMENTS.

      We have an obligation to continue to comply with the applicable reporting
requirements of the Securities Exchange Act of 1934, as amended, referred to as
the "Exchange Act," even though compliance with such reporting requirements is
economically burdensome.

RELATED PARTY TRANSACTIONS

      We have historically entered into transactions with related parties,
because several of our directors and one of our significant stockholders are
team owners. We believe that all the transactions which we have entered into
with our directors or significant stockholders have terms that are comparable to
the terms that we could have entered into with unaffiliated third parties with
respect to each of these transactions. In order to avoid conflicts of interest,
any of our directors who was affiliated with an entity that was entering into a
transaction with us would not vote on any matters related to such transactions
and may have, in certain circumstances, refrained from participating in any
discussions related to such transactions.

      Gerald R. Forsythe, a 22.9% stockholder of the Company, is one of the
principal members of Open Wheel which purchased the assets of CART, Inc.
pursuant to an Asset Purchase Agreement, entered into in February 2004. The
consideration paid to CART, Inc., for the purchase of the assets, along with the
stock of Promotion Agency, Ltd. And CART Licensed Products, Inc. was total
consideration of $3.3 million in cash,


                                       26
<PAGE>
the assumption by the buyer of $1.4 million in prize money owed to teams not
affiliated with the principals of Open Wheel, forgiveness of $1.3 million in
prize money due teams affiliated with principals of Open Wheel, including Mr.
Forsythe and the assumption of certain promoter, sponsorship, and other
contracts. The agreement was approved by the order of the bankruptcy court at a
hearing on January 28, 2004.

      In 2004, the Company is sanctioning the races for Open Wheel. The Company
receives $12,500 for each domestic race it sanctions and is reimbursed for
various expenses it incurs in sanctioning the events.

      We have also sub-leased our Indianapolis office and warehouse to Open
Wheel for substantially the same terms as our lease, we remain obligated on the
lease which runs through 2010.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

      With the exception of historical information contained in this Form 10-Q,
certain matters discussed are forward-looking statements. These forward-looking
statements involve risks that could cause the actual results and plans for the
future to differ from these forward-looking statements. The factors listed
below, among others, could cause the forward-looking statements to differ from
actual results and plans:

      Additional information concerning factors that could cause actual results
to differ materially from those in the forward-looking statements is contained
in the Company's SEC filings made from time to time, including, but not limited
to, the Form 10-K for the year ended December 31, 2003. Copies of those filings
are available from the Company and at the SEC's website www.sec.gov. The Company
undertakes no obligation to update publicly any forward-looking statements as a
result of new information, future events, or otherwise.

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

      INTEREST RATE RISK. Our investment policy was designed to maximize safety
and liquidity while maximizing yield within those constraints. At September 30,
2004, our cash equivalents consisted of money market funds. Because of the
relatively short-term nature of our investments, our interest rate risk is not
considered significant.

ITEM 4: CONTROLS AND PROCEDURES

      (a) As of September 30, 2004 we carried out an evaluation, under the
      supervision and with the participation of our Chief Executive Officer and
      Chief Financial Officer, of the effectiveness of the design and operation
      of our disclosure controls and procedures pursuant to Exchange Act Rule
      13a-14. Based upon that evaluation, our Chief Executive Officer and Chief
      Financial Officer concluded that our disclosure controls and procedures
      are effective in timely alerting them to material information relating to
      us (including our consolidated subsidiaries) required to be included in
      our periodic SEC filings.

      (b) Upon completion of the sale of substantially all of our operating
      assets to Open Wheel in February 2004, most of our employees resigned and
      accepted employment with Open Wheel and we ceased operations. We are in
      the process of winding up the affairs of the Company. We currently have
      two employees, the Chief Executive Officer and Chief Financial Officer,
      and we also use temporary accounting help in winding up the Company's
      affairs. Subsequently, we have had a reduction in our accounting staff. We
      have reviewed and revised our internal controls due to the reduction in
      staff and change in operations and believe we have effective internal
      controls and proper approval and authorization processes in place.


                                       27
<PAGE>
                      CHAMPIONSHIP AUTO RACING TEAMS, INC.

                          PART II - OTHER INFORMATION


Item 1.     Legal Proceedings.

            On December 12, 2003, S. R. Holdings Co. filed an action against the
            Company and Raceworks, LLC, its wholly owned limited liability
            company, for an alleged breach of contract to provide concession
            services at the Champ Car World Series race held in Miami, Florida
            in 2003 and in future years. The case was filed in the Circuit Court
            of Miami, Dade County, Florida. The Company and S. R. Holdings Co.
            have agreed to settle all claims for a payment by the Company of
            approximately $20,000. The parties are finalizing the settlement
            agreement and dismissal of the lawsuit.

Item 6.     Exhibits and Reports on Form 8-K.

            (a) Exhibits.

                  31.1  Form 10-Q Certification by Christopher R. Pook, Chief
                        Executive Officer dated as of November 15, 2004.

                  31.2  Form 10-Q Certification by Thomas L. Carter, Chief
                        Financial Officer dated as of November 15, 2004.

                  32.1  Section 906 Certification by Christopher R. Pook, Chief
                        Executive Officer dated as of November 15, 2004.

                  32.2  Section 906 Certification by Thomas L. Carter, Chief
                        Financial Officer dated as of November 15, 2004.

            (b) Reports on Form 8-K.

                  1)    On September 29, 2004, Championship Auto Racing Teams,
                        Inc. issued a press release announcing that it has filed
                        its 10-Q for the three-month period ended June 30, 2004.


                                       28
<PAGE>
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          CHAMPIONSHIP AUTO RACING TEAMS, INC.


Date:  November 15, 2004                  By:   /s/  Thomas L. Carter
      -------------------                       --------------------------------
                                                Thomas L. Carter
                                                Chief Financial Officer


                                       29